Federal exchanges up next in health law wars - GOP govs name their price on Medicaid expansion - Judge to White House: Account of health care negotiations 'sparse'

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UP NEXT IN THE HEALTH LAW WARS: FEDERAL EXCHANGES – The next shot in the legal war over the health reform law isn’t another lawsuit, but an academic paper that says federal exchanges can’t give people subsidies to help pay for their coverage. The paper puts intellectual heft behind an argument that has been percolating among the law’s opponents for some time. And though the law’s supporters have dismissed it out of hand (just as they dismissed the challenge to the individual mandate), the paper could be the start of a challenge that — if successful — could do almost as much damage to the law. If the courts were to accept the argument by Case Western Reserve University’s Jonathan Adler and the Cato Institute’s Michael Cannon, that could effectively enable states to kill federal exchanges by empowering them to cut off the subsidies. Lester Feder’s POLITICO story: http://politi.co/Q0yUGO. The paper: http://bit.ly/O1O21p

… There's lots of skepticism among legal scholars who say there are good reasons to read the law as intending subsidies to be the same regardless of who’s administering the exchange. The courts give wide latitude to federal agencies’ interpretations of a law, and any challenge to the exchange subsidies would have to target the IRS’s interpretation of the law’s premium subsidies provisions. In a rule published in May, the IRS specifically said both federal and state exchanges can administer the subsidies. That’s where Adler and Cannon use some of their toughest words — by basically calling the IRS a bunch of lawbreakers.

Good Monday morning and welcome back to PULSE, which is working this week in the Longhorn State. Gov. Rick Perry has declared that he cannot abide the Medicaid expansion, but PULSE can report that other expansionary forces here are in full force. Like the steaks.

--EXCHANGE WEEK: HITTING PAUSE – Two-plus weeks after the SCOTUS decision, there's not a whole lot of exchange momentum for GOP states previously on the fence. Actually, a couple of southern states that had been working ahead on an exchange have delayed some key decisions. Check out the latest Exchange Week for more: http://politico.pro/LUcDsF

--GUTTMACHER: ANTI-ABORTION ACTIVITY SLOWS A BIT IN 2012 – When it comes to anti-abortion legislative activity in the states, 2012 is not the year that 2011 was, but it may be partly due to a hangover from an unprecedented push the year before. The Guttmacher analysis: http://bit.ly/L9f84h. The Pro story: http://politico.pro/SwuiWz

GOP GOVS NAME THEIR PRICE ON MEDICAID EXPANSION — And it can be summed up in two words: block grants. Just a few weeks after the Supreme Court sided with two dozen Republican governors who had opposed the Medicaid expansion as coercive, some of them remain open to expanding the program anyway — but on their own terms. The POLITICO story: http://politi.co/NtfeXM

--WALKER: FEDS MAY LEAVE STATES HOLDING BAG ON MEDICAID, DEMS WORRIED, TOO – The Medicaid expansion/block grant grand bargain presumes that states trust the feds to deliver on the unprecedented funding match in the first place. And Wisconsin Gov. Scott Walker, a Republican, says Democratic governors privately share GOP concerns about the federal government holding up its end of the bargain over the long term, POLITICO’s James Hohmann reports. “Medicaid expansion would be 100 percent covered for three years. It goes down to 90 percent of that. Lord knows where it goes in the future,” Walker said at the NGA meeting. “If you’ve got tough budgetary times, the federal government’s already in over its head to begin with. …So for a lot of us, it’s a question of saying, why would anyone take on more potential risk?” HHS says the funding will not drop below 90 percent, but the concern remains. Walker cited promised funding for special education that was cut. The POLITICO story: http://politi.co/OHsfej

--HICKENLOOPER: GOVS RECOGNIZE ACA WON’T BE REPEALED — There’s another point on which Democrat and Republican chief executives agree, Colorado Gov. John Hickenlooper told Hohmann. The health care law won’t be fully repealed, regardless of what happens in November. “There is a real belief among Republicans and Democrats that after this election, no matter what happens, everybody’s going to roll up their sleeves and work together,” said Hickenlooper, a Democrat.

--SCOTT, BRANSTAD REJECT MEDICAID EXPANSION (AGAIN) – Not all governors are conflicted by the nuances on display at the NGA meeting, though. Florida Gov. Rick Scott and Iowa Gov. Terry Branstad both reiterated their opposition to the expansion on “Fox News Sunday.” Scott, with recent approval ratings hovering around 40 percent, said he didn’t want to "take money from the federal government that we know long-term they aren't going to give to us." The POLITICO story: http://politi.co/P7W8YW

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HELL-NO GOP GOVS MAKE RISKY BET – The governors who reject the massive funds that are being offered for the Medicaid expansion outright could see their gamble backfire if their party fails to sweep the November elections, Reuters reports. While the stance may garner kudos from the conservative base now, if the law survives the fall elections and takes effect in 2014, they could find themselves in a very difficult position for denying health benefits to their constituents that happen to be worth billions to health care providers and insurers. The effect could be dramatic. "It could change the political dynamics so that the ideologues are no longer running the show," said John Holahan, director of the nonpartisan Urban Institute's Health Policy Center. The Reuters story: http://reut.rs/NuBbpg

HAPPENING THIS WEEK: The last in a four-part briefing on reducing “red tape” for enrolling kids in Medicaid and CHIP is today at 3 p.m. in HVC-201 (First Focus President Bruce Lesley is moderating a panel) … former CMS Administrators Don Berwick and Mark McClellan headline a Health Affairs briefing on ACA implementation Tuesday at 8 a.m. at the National Press Club … The House Energy and Commerce Health Subcommittee holds a hearing at 10 a.m. Wednesday on reforming Medicare physician payments … At the same time, the House Appropriations Subcommittee will mark up its Labor-HHS spending bill.

NYT: FDA CONDUCTED ‘VAST’ SURVEILLANCE PROGRAM — The FDA’s efforts to monitor emails of disgruntled scientists in 2010 ballooned into a wide-ranging program to counter internal and external critics of its medical products review process, according to new details that emerged Sunday in a New York Times report. The paper was tipped off to a cache of 80,000 pages of documents that was apparently posted online accidentally by a contractor working for FDA on the surveillance effort.

… The documents, which were taken down Friday, did not reveal who in the agency leadership had knowledge of the program, but showed that FDA had an “enemies list of sorts,” including 21 agency employees, Congressional officials, outside medical researchers and journalists thought to be working together to put out negative information about the agency. The offices of Rep. Chris Van Hollen (D-Md.) and Sen. Chuck Grassley (R-Iowa) were among those targeted in the surveillance effort. Both legislators condemned the practice.

… Last month, the Office of Management and Budget was concerned enough over the surveillance to send a government-wide memo emphasizing that while it was acceptable to monitor employees’ communications, the monitoring could not be used to intimidate whistleblowers, the Times reports. Last September, six current and former FDA scientists sued the agency over the surveillance. The NYT story: http://nyti.ms/Na8D77

JUDGE TO WHITE HOUSE: ACCOUNT OF HEALTH CARE NEGOTIATIONS ‘SPARSE’ –The White House's description of closed-door meetings that led to the Affordable Care Act is too vague to defeat a conservative group's lawsuit seeking minutes of the sessions, a federal judge ruled Friday. U.S. District Court Judge Richard Roberts denied the White House's request to throw out the suit filed by longtime gadfly Larry Klayman and his current organization, Freedom Watch. In September, White House Deputy Counsel Kimberley Harris filed a declaration saying that a group Klayman dubbed the "Obama Health Reform De Facto Advisory Committee," or, far more simply, OHRDFAC, "does not exist and has never existed." She acknowledged talks with "a broad range of stakeholders," including representatives of Planned Parenthood and the U.S. Chamber of Commerce. However, Freedom Watch said Harris didn't get into enough detail about the White House's outside consultations to establish that the suit should be rejected. Roberts, a Clinton appointee, agreed. "Freedom Watch's contention that the information in the Harris declaration is sparse has merit," the judge wrote in a three-page order issued Friday. The POLITICO story: http://politi.co/P5acCt

WHAT WE’RE READING

Bill Keller of The New York Times addresses five “fallacies” about the health reform law, from the claim that it’s a “job killer” to the conventional wisdom that it’s a losing issue in the fall elections. http://nyti.ms/Q0Z4Jp

Obama’s experience pushing health care legislation in the Illinois Legislature, and the failure of the ill-fated Illinois Covered proposal that came after Obama was elected to the U.S. Senate, helped shape the federal Affordable Care Act, The State Journal-Register reports. http://bit.ly/NWNoDF

The Richmond Times-Dispatch reports that there’s a lot of confusion about the health reform law among small business owners, who still aren’t sure whether they will drop coverage for their employees or keep it come 2014. http://bit.ly/P7uZW3

Missouri Gov. Jay Nixon said that expanding Medicaid coverage would be his “first order of business” when taking office, but he failed to get a moderate Medicaid expansion through a Republican Legislature and now isn’t taking a position on the expansion in the ACA, the AP reports via The Jefferson City News Tribune. http://bit.ly/OwSe77

The Cleveland Plain Dealer looks at what’s at stake for Ohio hospitals in that state’s decision to pursue the Medicaid expansion or not. http://bit.ly/LkTHx0

The FDA is investigating how some 75,000 documents obtained through its surveillance program of internal and external critics found their way online, The Wall Street Journal reports. http://on.wsj.com/OHQrNO

The British government plans to require all taxpayer-funded research to be made public starting in 2014, The Guardian reports. http://bit.ly/NYRICy

The Federal Trade Commission is warning consumers against a scam in which people, claiming to be government representatives, are asking for personal information because of the Affordable Care Act. http://1.usa.gov/NR52c3